Reinsurance Provision Capping
Hello,
The wiki says that the RP calculation for unauthorized reinsurers is no longer capped by C. But in BA practice exam 1, #13, it looks like the unauthorized calculation does include caps of C. Just looking to be clear about whether or not these caps apply? And is the final unauthorized RP still capped at the total recoverable amount of 5100?
In this same question, for the authorized calculation, the solution says to remember that the quantities are capped by: and then it uses blank cells to calculate the cap. Is this meant to indicate that caps no longer apply here?
Comments
The issues you bring up with PE1.13 solution are valid. We will address them and get back to you.
PE1.13 solution is now revised.
Thank you. I see that the unauthorized RP is capped at the total recoverable. In the current PE1.13 solution, the authorized RP does not seem to be capped by the total recoverable like the unauthorized is, but in the solution to PE2.13, both the unauthorized and authorized RPs are capped at the total recoverable amounts, so I'm still uncertain.
There is no need for a T-cap on the authorized RP (slow or non-slow), because the RP cannot exceed T.
The "T-cap" notes in the PE2.13 solution were superfluous. We will take them out.
This capping comment in Q13 has now been removed.